(a) claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour walls, basins and waterways and aids to navigation), occurring on board or in direct connection with the operation of the ship or with salvage operations, and
consequential loss resulting there from;
(b)claims in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage;
(c) claims in respect of either loss resulting from infringement of rights other than contractual rights, occurring in direct connection with the operation of the ship or salvage operations; (d) claims in respect of the raising, removal, destruction or the rendering harmless of a ship
which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such a ship;
(e)claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship;
(l) claims of the person other than the person liable in respect of measures taken in order to avert or minimise loss for which the person liable may limit his liability in accordance with this Convention, and further loss caused by such measures.
(As a point of detail, claims under (d) can only benefit from limitation if a formal fund has been established to compensate the harbour authority for the additional expense and this is not
common). In addition, the Merchant Shipping Act 1979 (Clause 18) removes the liability from the owner of a British ship for any loss or damage by reason of fire onboard except if it can be proved (in line with Article IV) that the loss or damage resulted from his personal act or omission,
committed with the intent to cause loss, or recklessly and with knowledge that such loss would probably result.
Exceptions are contained in Article III and these are: (a) claims for salvage or contribution in general average;
(b) claims for oil pollution damage within the meaning of the International Convention on Civil Liability for Oil Pollution Damage, 1969 (or any Protocol thereto), claims subject to any international Convention or national legislation governing or prohibiting limitation of liability for nuclear damage.
(c) claims against the shipowner of a nuclear ship for nuclear damage,-
(d) claims by servants of the shipowner or salvor whose duties are connected with the ship or salvage operations;
For many years, and in the 1957 conventions, the term 'actual fault or privity' was used to establish whether or not the owner could benefit from the limitation of liability allowed by the convention. This application of the term to a specific incident was, not surprisingly, the subject of much legal argument and no strong consensus emerged as to its interpretation. The 1976
convention introduced a new concept; in order to break the shipowner's right to limit his liability, it must be proved that the loss resulted from:
. . . the personal act or omission of the person seeking to limit, committed with the intent to cause
such loss, or recklessly and with knowledge that such loss ...
would probably result (Article IV). The burden of proof moves to the claimant and that means that, unlike before, if there is doubt (on a balance of probability) about the personal misconduct of the owner, he will be entitled to limit. In other words, the privilege has become a right, a quite significant change and one which might have changed earlier legal decisions such as the Lady Gwendolyn [1965] LLR 294 had they been decided under the new convention. (This was a case of-the owner's marine superintendent failing to take positive steps to ensure that the master did not proceed at excessive speed during reduced visibility. It was held that owners could not limit their liability since their 'actual fault or privity' had contributed to the accident-a collision.)
Nevertheless, a claimant can still be expected to scrutinise all available evidence in order to break' the shipowner's right to limit and masters and all on board need to be very careful when making statements or making records available.
In chapter six reference is made to the privileged information and a claimant's right of discovery and the way in which it is possible to convey confidential information to a solicitor. In the event of any major incident, a master is well advised to:
- Contact the local P&I Club correspondent and arrange for legal support;
- Call a meeting of the ship's management team as soon as possible and clearly brief them on both to whom and who not to make statements, and how as well as how to handle surveyors and inspectors, lawyers and port and State authorities and what records, log books etc. may or may not be inspected or copied;
- Ensure that the heads of department clearly brief their staff in terms which they will understand; - Set up a meeting room where the master will, unless a senior representative from the owner
takes over, firmly chair all meetings, preferably with a Club representative at his side. It may well be found bencficial to have these meetings in a public room and preserve the sanctity and privacy of the master's or ship's own office. It may also be found beneficial to detail one officer-the second officer-to act as permanent secretary and keeper of the records.
- Ensure that all visitors are met, their identity positively checked and that they are not allowed to roam unaccompanied around the vessel;
- Decide who will deal with the media and how, if the incident is likely to attract this sort of attention (see chapter eleven).
It might be wondered how the shipowner managed to convert his privilege into a right to limit his liability and the answer lies in his agreement to raise the level of compensation. Article VI
addresses the limits of liability and these are calculated on the basis of the vessel's gross tonnage as established by the 1969 Tonnage Convention. The gross tonnage is multiplied by a monetary value which is defined by special drawing rights (SDRs) a unit of account whose value is
determined daily by the International Monetary Fund based on a basket of currencies.
If personal claims are involved, the SDR value is double that of the fund related to other claims not involving injury or death. Once the fund is established, it is then divided amongst the
claimants, with the personal injury and death claims taking precedence. The claim fund is calculated according to the table on the previous page.
Hovercraft have separate limits and there is also a separate limit of liability for claims by passengers against the vessel in which they are carried. (The expression 'open liability' was mentioned with respect to third party claims, with contractually based, cargo claims being considered closed. Passengers' claims are sometimes defined as partly closed.) The fund is calculated by multiplying 46,666 SDR by the total number of passengers which the vessel is certified to carry with an upper limit of 25,000,000 SDR. Although not addressed here, this might be modified by the Athens Convention 1974, which is calculated on the basis of passengers actually being carried.
At the end of 1995, the US dollar stood at 1.48441 to the SDR, so typical limitation funds were:
Conclusion
Any oceangoing cargo vessel carrying cargo is involved with large sums of money and potentially large liabilities. Even if there is no damage to the cargo, the master, in signing bills of lading, has provided a document of title to the full value of the cargo to a consignee and the vessel and her owner are thereby linked not only to the contract of carriage but to the commodity value itself. These relationships are governed by the framework of international, and sometimes conflicting, conventions and national laws described in this chapter. It is virtually impossible to set out in precise, practical detail every circumstance which the master may face. The objective of this chapter is to explain the underlying principles in a way which may help the master manage those contracts of carriage for which he becomes responsible and which are discussed in more detail in chapter six.
ACKNOWLEDGEMENTS
MANY PEOPLE from London's maritime legal profession contributed to this chapter, and particular thanks are due to Charles Baker of solicitors Herbert Smith. A great number of papers and booklets are produced within the London maritime world and it is a pity that more is not seen of them by those who serve the industry at sea. This chapter has endeavoured to get at the trade which drives the demand for shipping and in this connection the assistance of Pamela Kirby-Johnson, Director General of the Grain and Feed Trade Association, Dalgety Agriculture, and traders Arcady and E. D. & F. Man must be acknowledged, together with rice trader Alan Harper, chairman of the Baltic Exchange.
Subsequent Holders; The COGSA 1992. Paper December 1994: Graham Harris, Partner Richards Butler. From Hague to Hamburg. Paper December 1994: judge Anthony Diamond, QC.
Incorporation of Charterparty Terms. Conference Paper December 1994: Charles Williams, Thomas Cooper & Stibbart.
Rights of Suit in Respect of Carriage of Goods by Sea. Law Commission No. 196, HMSO HC250. Comparison; Hague, Hague-Visby and Hamburg Rules. Paper May 1995: John Culley, Thomas Miller & Co Ltd.
The Hamburg Rules. Notice to Members September 1992: The International Group.
Bills of Lading. Conference Paper December 1994: Charles Williams, Thomas Cooper & Stibbart. Limitation of Liability. Paper: Sonja Fink, Thomas Miller & Co Ltd.
York-Antwerp Rules, 1994, An Analysis. Charles Hebditch and John MacDonald: Richards Hogg.
ANNEXES FOR CHAPTER 5
- The Grain and Feed Trade Association: general contracts. GAFTA sales contract No. 64; FOB terms for
grain in bulk. Extracts from the GAFTA sampling rules No. 124. - Summary of sample oil contracts.
Gas oil sale contract. Sale of Bonny light.
- Extracts from the Hamburg Rules-articles 15 to 19. - Comparisons of Hague/ Hague-Visby and Hamburg Rules.